Outgoing Financial Services Authority chief executive Hector Sants has warned that the responsibility given to the Bank of England’s next governor could be too much for one individual.
In 2013, the successor to current Bank governor Mervyn King will be tasked with heading the regulation and supervision of banks and big financial institutions.
In an interview with BBC business editor Robert Peston last week, Sants warned the role could be too much for one person given the size of the task.
Sants told Peston: “We could be concerned that the operational task given to the governor is too great. I think the risk is that operationally this is going to be too difficult for just one person to manage.”
Until he announced he was to quit the regulator earlier this year, Sants was due to head the new Prudential Regulation Authority, which will sit within the Bank.
The Treasury Select Committee has raised a number of concerns about governance and accountability issues, given the new powers the bank will be taking on.
Sants has also warned of the dangers of the UK sitting outside the banking union proposed by the European Commission.
Chancellor George Osborne has indicated that the UK is unlikely to want to be part of the type of banking union proposed this week by Jose Manuel Barroso, president of the European Commission.
Sants says: “If you move to an environment where the majority of the countries are inside the eurozone and therefore have a different agenda in respect to the rulebook, that would become an unworkable model as we would become dependent on a rulebook we had no control over.”
Sants suggests the government and the Bank could have avoided a run on Northern Rock if they had taken up his idea to provide a loan to Lloyds TSB to buy the bank.
Sants says: “I think things would have been different if the government and the Bank had taken my recommendation that they should provide liquidity support to Lloyds TSB to purchase Northern Rock.
“It would have avoided the queues at Northern Rock and would have changed the climate in relation to the old building society sector that had moved into banking.”